Wilshire Real Estate Investment Trust to Restructure Balance Sheet and Postpone Dividend Distribution To Provide Short-Term Liquidity.

PORTLAND, Ore.--(BUSINESS WIRE)--Oct. 26, 1998--Wilshire Real Estate Investment Trust Inc. (Nasdaq:WREI) a hybrid REIT specializing in diversified real estate investments, today announced that, as a result of adverse market conditions, it has restructured its balance sheet through the sale of certain assets and will postpone by approximately 90 days payment of its previously announced third quarter dividend to increase short-term liquidity.

The asset sales are expected to result in a realized loss of approximately $40-50 million, which will be reflected in the Company's third and fourth quarters, as required by GAAP. The asset sales reduce total assets of the Company to $450-500 million. The market for mortgage backed securities, and in particular, subordinate credit related tranches of these securities, has experienced dramatically widening spreads throughout the last ten weeks. Liquidity problems affecting certain Wall Street firms, hedge funds, and other financial instruments investors have exacerbated this market phenomenon through forced liquidations of their assets. This has led to an increased need for liquidity at WREI both to meet collateral calls and as a preemptive measure to protect against future MBS spread distortions that the Company expects may be experienced by the markets in general.

"The Company was on track with its expected investment and dividend rate prior to the unfavorable market conditions that have emerged since the third quarter dividend was announced. The sale of assets, consisting of both mortgage-backed securities and real properties, reduces debt, increases current liquidity, meets collateral calls and reduces the risk of future collateral calls," said Andrew Wiederhorn, Chairman and Chief Executive Officer. "The Company has no expectation of insolvency and still maintains significant net asset value. Postponing payment of the third quarter dividend for 90 days and finalizing certain asset sales for November closing will provide additional short-term liquidity to the Company as well."

According to Lawrence Mendelsohn, President, "The Company has not had exposure to commercial MBS, only residential MBS. Due to current and expected residential mortgage prepayments and the Company's strategy of purchasing residential MBS at discounts to unpaid principal balance, faster payment of principal should enhance yields received from many of the Company's remaining residential MBS investments."

Wilshire has declared a $0.40 quarterly cash dividend payable on October 27, 1998 to shareholders of record on September 30, 1998. The payment is now planned for January 27, 1999. The Company will pay interest, at the rate of 4% per annum, on the amount due calculated from the previously announced payment date through the date of the actual payment.

The Company expects to release actual results during the week of November 10, 1998.

Wilshire Real Estate Investment Trust was formed to invest in real properties and in distressed commercial and multifamily mortgage loans in the US, mortgage-backed securities, and international mortgage loans and real properties. The Company's business and investment affairs are managed by Wilshire Realty Services Corporation, a subsidiary of Wilshire Financial Services Group Inc. (Nasdaq:WFSG) which specializes in loan portfolio acquisition and securitization, mortgage banking and loan servicing.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in such statements. All of the statements contained in this release which are not identified as historical should be considered forward-looking. In connection with certain forward-looking statements contained in this release and those that may be made in the future by or on behalf of the Company which are identified as forward-looking, the Company notes that there are various factors that could cause actual results to differ materially from those set forth in any such forward-looking statements. Such factors include but are not limited to, the real estate market, the availability of real estate assets at acceptable prices, the availability of financing, interest rates, and European expansion. Accordingly, there can be no assurance that the forward-looking statements contained in this release will be realized or that actual results will not be significantly higher or lower. The forward-looking statements have not been audited by, examined by, or subjected to agreed-upon procedures by independent accountants, and no third party has independently verified or reviewed such statements. Readers of this release should consider these facts in evaluating the information contained herein. The inclusion of the forward-looking statements contained in this release should not be regarded as a representation by the Company or any other person that the forward-looking statements contained in this release will be achieved. In light of the foregoing, readers of this release are cautioned not to place undue reliance on the forward-looking statements contained herein.